1.1 As we noted in our Report of 15 November
2000, waste from electrical and electronic equipment (WEEE) is
identified in the Community's Fifth Environmental Action Programme[9]
as one of the target areas for prevention, recovery and safe disposal,
and the need for action in this area has been endorsed by Resolutions
of both the Council and the European Parliament.

1.2 According to the Commission, there are
a number of reasons why WEEE presents particular problems. First,
components tend to include heavy metals; halogenated substances
(CFCs); polychlorinated biphenyls (PCBs); polyvinyl chloride (PVC);
brominated flame retardants; and asbestos and arsenic. Since more
than 90% of WEEE is landfilled, incinerated or recovered without
any pre-treatment, the Commission is concerned that it accounts
for a large proportion of the hazardous materials in the waste
stream. Secondly, it is concerned that the decreasing life-span
of much of the equipment has led to a rapid growth of WEEE, equivalent
to about three times that of municipal waste in general. Thirdly,
it sees the proliferation of national measures in this area as
hampering the effectiveness of national recycling policies; as
leading to substantial disparities in the financial burdens for
economic operators; and as having implications for trade in electrical
and electronic equipment.

1.3 The Commission therefore brought forward
in June 2000 two proposals. The first of these aims to reduce
the amount of such waste from electrical equipment[10],
and to encourage its recycling and recovery. In order to achieve
this, it suggests:

that producers should take financial responsibility
for certain phases of the waste management of their products,
thereby creating an economic incentive for them to adapt product
design to the prerequisites of sound waste management;

that separate collection of WEEE should
be ensured through appropriate systems;

that producers should set up appropriate systems
for the improved treatment and reuse/recycling of WEEE;
and

that adequate information should be provided
to consumers about the systems and their role in it.

1.4 More specifically, it proposes that:

Member States should be required to ensure that
systems are set up so that final holders and distributors can
return waste from private households free of charge;

Member States should aim to achieve by 31 December
2005 an annual collection target from households of 4 kg per head,
with a compulsory target being set in due course;

producers should be required to set up treatment
systems of a specified standard using authorised recyclers and
treatment operators;

reuse, recycling and recovery targets should
be set for certain categories of electrical waste, to be achieved
by 31 December 2005;

producers should be required to meet, within
five years of the Directive coming into force, the costs of collecting
electrical waste from central collection points, and the treatment,
recovery and environmentally-sound disposal of end-of-life equipment
from households;

Member States should be required to ensure that
the public is informed about collection systems and their role
in contributing to the recovery of WEEE; and

producers should be required to provide information
to treatment facilities and recyclers to identify the components
and materials and the location of dangerous substances within
the equipment.

1.5 However, the Commission believes that,
even if these measures were to be adopted, there would still be
some environmental risk, and that substitutes for the most dangerous
substances should be used wherever possible. Its second proposal
would therefore harmonise the rules on the restriction of the
use of hazardous substances in electrical and electronic equipment
by:

requiring the use of substitutes for mercury,
lead, cadmium, hexavalent chromium and PPB and PBDE flame retardants
from 1 January 2008;

providing exemptions to this requirement where
the use of these substances is unavoidable, or where their substitutes
would have greater negative impacts on health or the environment;
and

setting up a Community procedure to amend these
exemptions in the light of advances in scientific knowledge or
technical progress, and to establish maximum levels to which the
presence of the substances would be tolerated in specific materials
and components.

1.6 As regards the wider policy implications
of these two proposals, the Commission says that it has sought
to take into account subsidiarity concerns by leaving Member States
flexibility over collection, treatment and financing systems for
managing WEEE, and that it is only introducing obligations necessary
to achieve environmental objectives. It also considers that the
proposals complement Community legislation in such areas as the
disposal of waste through landfill and incineration, on specific
waste streams, such as batteries, and on measures contributing
towards meeting the Community's climate change objectives.

1.7 The Commission puts the net cost of
the collecting and re-using/recycling requirements for household
WEEE as between 500 million and 900 million euros a year, though
these figures assume that Member States are not already undertaking
their own initiatives, and make no allowance for such factors
as economies of scale. It also suggests that, since a number of
manufacturers have already phased out heavy metals and flame retardants,
the cost of the second proposal could perhaps be limited to about
150 million euros a year.

1.8 In her Explanatory Memoranda of 2 October,
the Minister for Small Business and E-Commerce at the Department
of Trade and Industry (Ms Patricia Hewitt) said that the first
proposal is in line with the Government's national waste strategies,
and with the voluntary collection schemes already operated by
a number of the sectors concerned. As a consequence, she considered
that the 4 kg per head collection target is probably already exceeded
in this country. However, she also identified a number of issues
of potential concern, notably that some of the provisions may
be difficult to implement, and that the measures (whose costs
and benefits have not been fully assessed) are likely to impose
"significant" burdens on business. The Government is
therefore looking at the extent to which the provisions are appropriate.
In the meantime, an initial Regulatory Impact Assessment suggests
that the annual costs might lie between £540 and £545
million, with one-off costs of between £7.3 and £8.6
million. The associated benefits have proved more difficult to
quantify, but the Assessment suggests that some aspects of the
Directive may encourage collection, whilst others (such as the
cost of meeting recycling targets) may have the opposite effect.
It adds that the environmental benefits of the treatment and recovery
requirements laid down are likely to vary widely between items.
The Minister also highlighted the possible subsidiarity implications
of the proposal, but, although she said that the Government accepts
that "some" action at Community level may be desirable,
she did not specify what.

1.9 On the second proposal, the Minister
said that the Government agrees that, where product standards
and requirements are set, these should be harmonised, and she
considered that reducing the hazardous content of electrical and
electronic equipment could lessen the potential for any environmental
impacts resulting from their disposal. That said, she identified
the main issues for the UK arising from the proposal as being:

the need for adequate risk assessment and cost
benefit analyses; and

the possibility that there may be circumstances
where the continued use of these substances is justified, for
example where switching to others could have adverse implications.

1.10 The Minister also supplied an initial
Regulatory Impact Assessment for this proposal, which made the
point that, although the use of these substances is declining,
production of electrical and electronic equipment is increasing,
making it difficult to assess accurately either the costs or the
benefits of the action proposed. She suggested that the benefits
from any further measures to limit hazardous substances within
the UK may be limited, but said that, depending on the lead-in
time allowed, the costs have been estimated by industry as being
as high as £1.2 billion on a one-off basis, with (unquantified)
on-going costs arising from the use of more expensive materials
or increased energy use.

1.11 In the conclusion to our Report, we
commented that these are obviously potentially significant proposals
on which considerable uncertainties arise as to the relative costs
and benefits. For that reason, we said that we would not be able
to take a view on them until we had seen the updated Regulatory
Impact Assessments we assumed the Minister would be providing.
We said that we would also like to see answers on the matters
which she herself had raised (and which are summarised in paragraphs
1.8 and 1.9 above).

1.12 In the meantime, we said that there
was one fundamental question on which we would welcome the Government's
views. The Minister's Explanatory Memorandum had suggested that
implementation of the first of these proposals would lessen the
potential for environmental harm, and so reduce the possible gains
from the second. However, it seemed to us that the converse might
equally be true, in that limiting the inclusion of hazardous substances
in electrical and electronic equipment would reduce the need for
the various measures set out in the first proposal. We further
suggested that prevention of this kind would be not only preferable
in principle to the sort of cure proposed here, but also consistent
with the priorities in the Community's overall waste management
strategy.

Minister's letter and Explanatory Memoranda of
7 December 2000

1.13 We have now received from the Minister
a letter of 7 December 2000, and two revised Explanatory Memoranda
of the same date (to which are attached revised Regulatory Impact
Assessments). The letter seeks to address the points in our previous
Report, whilst the Explanatory Memoranda identify the changes
which have been made in the proposals since the Minister's earlier
Memoranda of 2 October as a result of discussions in Brussels.

1.14 As regards the implementation of the
measure, the Minister says that the Government has consulted widely
over the last few months, but that, although this has yielded
"some useful information", most respondents were unable
to provide any indication of costs. She suggests that this reflects
the complexity of the provisions and the uncertainty surrounding
them, and says that her department is now trying to identify individual
respondents and to consult them separately. However, she also
highlights the extent to which the companies concerned have stressed
the need for enough time to cope with any product design changes
made necessary by these measures; the concerns which have been
expressed about the feasibility of the recovery, reuse and recycling
targets envisaged in the proposal; and the concerns from the voluntary
sector that, if whole products which are reused are not counted
towards these targets, this could result in a disincentive to
reuse. So far as subsidiarity is concerned, the Minister essentially
repeats the points in her earlier Explanatory Memoranda (and set
out in paragraph 1.16 of our Report of 15 November 2000), but
does not directly address the question in the conclusion to that
Report. In answer to our question about the relative emphasis
to be placed on the two measures proposed, she states that the
two directives would be complementary, and that the measure restricting
the use of hazardous substances in electrical and electronic equipment
is intended to make their treatment, recovery and recycling easier
(and cheaper) and also to help reduce their general impact on
the environment.

1.15 The format of the revised Explanatory
Memoranda and Regulatory Impact Assessments makes it extremely
difficult to identify the amendments which have taken place over
the last two months or so, but, so far as we can discern, the
main changes to the first proposal relate to the implementation
periods allowed. Thus, the collection target for household waste
would have to be achieved within 36 months of the entry into force
of the Directive, instead of by 31 December 2005 (which could
in practice lead to a year's reduction in the time allowed). There
would be similar changes in the timetable for attaining the various
reuse, recycling and recovery targets, and in the time within
which producers would have to meet the costs of collecting WEEE
from central collection points and the treatment, recovery and
environmentally sound disposal of end of life equipment from households.
However, these amendments would apparently give rise to only small
changes in the earlier cost estimates.

1.16 The Minister adds that the UK might
not be able, in the foreseeable future, to reach the high levels
proposed in the Directive for all products. She also identifies
as problem areas the large number of household products to which
the measure would apply and the disproportionately high costs
for small businesses. In view of this, she says that the UK intends
to push for the option of derogations "if future evidence
demonstrates a strong case for removing specific products",
and for "an option to eliminate producer responsibility for
the smallest manufacturers".

1.17 So far as the second proposal on limiting
hazardous substances is concerned, the Minister says that it has
been suggested that there should be a derogation for lead in solder
used for printed circuit boards, and some relaxation as regards
mercury used in fluorescent lamps and hexavalent chromium used
in anti-corrosion coatings.

1.18 Finally, the Minister has addressed
in her letter the handling of these proposals in Brussels. She
says that they are due to be discussed at the meeting of the Environment
Council on 18-19 December, at which the Presidency is hoping to
achieve a political agreement. She adds that it would strengthen
the UK's ability to have its views fully considered if Parliamentary
clearance had been given, and she therefore asks us to give this
before the Council meeting.

Conclusion

1.19 As we have already noted in paragraphs
1.11 and 1.12 above, our Report of 15 November 2000 highlighted
the considerable uncertainties surrounding these proposals, and
the need both for updated Regulatory Impact Assessments and for
answers on some of the matters which the Minister herself had
raised, notably on the implementation of the proposals and on
subsidiarity. It would appear from the latest material provided
by the Minister that major uncertainties still exist, and that
these have, if anything, increased as a result of pressures to
shorten the implementation periods laid down.

1.20 In view of this, it would, in our
opinion, be premature to lift the scrutiny reserve, and we are
not convinced by the Minister's explanation of why this is necessary.
In the first place, a parliamentary reserve is now a familiar
part of the negotiating process in Brussels, and is not peculiar
to the UK. Consequently, we see no reason why the existence of
such a reserve need inhibit a UK Minister from participating fully
in any discussion in the Council, short of reaching an agreement.
Secondly, whatever the Presidency may say, the reality is that
these proposals have yet to be considered by the European Parliament,
and there seems no imperative for the Council to reach an agreement,
political or otherwise, at this stage; indeed, given all the uncertainties
which still exist, we consider it would be unwise to contemplate
this.

1.21 We also believe that the issues
raised by these proposals are ones which it would be right for
the House to consider before there is any question of an agreement
being reached in Brussels. We are therefore recommending them
for debate in European Standing Committee C.